Congress closed out 2011 with yet another nasty fiscal policy fight – this one over how to extend what was supposed to be a temporary, one-year reduction in the payroll tax into 2012. Republican efforts to pay for the $120 billion tax cut by freezing pay for civilian government employees and reducing the federal workforce were met with a Democrat-proposed surtax on Americans earning more than $1 million per year. For his part, President Obama pledged “to go ahead and [take action] ourselves … if Congress is not willing to act.”
This episode illustrates the debate that will occupy Washington and the entire nation as the 2012 election approaches. For the first time since the 1980 election more than three decades ago, the presidential campaign will be dominated by a stark, no-holds-barred debate over the size and scope of government – and who should pay for it.
Given the weak economy, the Obama campaign is trying to position the election as a choice between two philosophies of government. As President Obama said in a recent “60 Minutes” interview: “The question next year is going to be … do [Americans] see a more compelling vision coming from the other side. Do [Americans] think that cutting taxes further, including for the wealthy, cutting taxes on corporations, gutting regulations – do we think that is going to be somehow more successful?”
Republican candidates have a different strategy – namely to make the campaign a referendum on President Obama’s performance on the economy. Mitt Romney summed up the storyline: “Obamanomics is a failure. With little private sector experience, President Obama turned to the only thing he really knew: government. His distrust and antipathy for the private sector led to policies that burdened and constrained business at the very time we needed it to advance, to invest, and to hire.”
The deep partisanship that divided Washington in 2011 won’t be resolved unless the American people deliver a clear, convincing mandate to one party or the other. On November 6, 2012, Americans will have that opportunity.
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